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Spectre of US debt default looms at Asia summit

Mounting fears of an “unthinkable” US debt default emerged at an Asia summit Thursday as President
Barack Obama’s top diplomat sought to reassure regional allies anxious to avoid
fresh economic turmoil.

With Asia sitting atop a mountain of Treasury bonds, a political stalemate in Washington that raises the spectre of a calamitous US debt default has become a major issue of concern at the meeting in Brunei.

Chinese Premier Li Keqiang expressed "Beijing's concern about Washington's debt-ceiling problem," in talks with US Secretary of State John Kerry late Wednesday in Brunei, China's official Xinhua news agency reported.

A US official travelling with Kerry confirmed that the debt ceiling was discussed but downplayed the Chinese concerns, saying Li had vowed continued investment in the world's largest economy.

"Secretary Kerry made clear that this is a moment in Washington politics and reaffirmed the president's commitment to resolving the issue," the official told reporters. "They also agreed that the United States has one of the strongest economies in the world and that they have a shared interest in continuing the close economic working relationship."

China held $1.277 trillion (S$1.58 trillion) in US debt as of July, according to Treasury Department figures.

Kerry and Li joined 16 other world leaders in Brunei on Thursday for the East Asia Summit - the climax of nearly a week of top-level meetings which began in Bali at the Asia-Pacific Economic Cooperation forum's annual gathering.

The crippling budget standoff in Washington forced Obama to cancel a visit to Asia where he had hoped to tout his "pivot" towards the region at the back-to-back summits.